FAQs
Energy, equity REITs,1 and financials are some of the equity sectors that could stand to benefit in an inflationary environment.
What stock sectors do well in inflation? ›
Defensive sectors.
Candidates come from utility stocks, consumer staples and healthcare, defensive sectors that tend to fare well in inflationary or recessionary environments. This is because there is a steady demand for their products regardless of economic conditions.
What are the best defensive sectors for inflation? ›
- Gold. Gold has often been considered a hedge against inflation. ...
- Commodities. ...
- A 60/40 Stock/Bond Portfolio. ...
- Real Estate Investment Trusts (REITs) ...
- The S&P 500. ...
- Real Estate Income. ...
- The Bloomberg Aggregate Bond Index. ...
- Leveraged Loans.
What sector of the equity market will be most negatively affected by higher inflation? ›
That means that typically, their stock prices move higher when inflation moves higher. – Conversely, companies in sectors such as consumer staples and utilities have negative correlations with inflation. That's in large part because these companies consume commodities, which increases their input prices.
Which sector is most affected by inflation? ›
5 Industries Critically Impacted by Rising Inflation
- Wholesale trade, construction, and food and accommodations are among the industries feeling the pressure. ...
- Wholesale Trade. ...
- Construction. ...
- Accommodations and Food. ...
- Other Services. ...
- Transportation and Warehousing. ...
- The bottom line.
What is the best investment to beat inflation? ›
Bonds or debt funds that invest in bonds are linked closely to interest rates in the economy, which works closely with the inflation rates. If inflation rises, interest rates rise. Interest rates and bond prices move in opposite directions. Hence bond prices will fall in this case.
Who is most likely to benefit from inflation? ›
Inflation allows borrowers to pay lenders back with money worth less than when it was originally borrowed, which benefits borrowers. When inflation causes higher prices, the demand for credit increases, raising interest rates, which benefits lenders.
What are the best commodities to beat inflation? ›
Gold, Precious Metals, and Commodities
All that glitters is gold, especially during times of inflation. Precious metals such as gold have been historical favorites for hedging against inflation due to their scarcity, tangibility, and historically negative correlation to paper money.
What are the worst investments during inflation? ›
What Are the Worst Things to Invest in During Inflation? Some of the worst investments during high inflation are retail, technology, and durable goods because spending in these areas tends to drop.
What is the best asset against inflation? ›
Gold may be the best hedge against inflation and geopolitical risks. Gold emerged as the best commodity to serve as a potential hedge against inflation and geo-political risks.
Medical care, used cars and trucks, education costs, and food away from home also edged up. Economists say shelter and fuel costs are the two biggest anchors weighing inflation from reaching levels the Fed wants to see.
What stock sectors are best during high interest rates? ›
Financials First
The financial sector has historically been among the most sensitive to changes in interest rates. With profit margins that actually expand as rates climb, entities like banks, insurance companies, brokerage firms, and money managers generally benefit from higher interest rates.
Which sector is insensitive to unexpected inflation? ›
Physical assets and equity are less sensitive to inflationary risk and may even benefit from unanticipated inflation.
What sectors do well when inflation is high? ›
8 Sectors That Benefit From Inflation
- Energy. Oil and gas companies stand to benefit because higher prices mean increased revenue, as the cost of the product being sold has gone up. ...
- Transportation. ...
- Financial Sector. ...
- Utility Companies. ...
- Healthcare Providers. ...
- Consumer Staples. ...
- Technology. ...
- Industrial Stocks.
What stocks to buy when inflation is high? ›
During inflationary periods, commodities (and the stocks of companies that deal with them) tend to outperform the overall stock market. This can include energy companies, precious metal miners, steelmakers, and other industries. You can also buy exchange-traded funds (ETFs) that track baskets of commodity stocks.
Who is most negatively affected by inflation? ›
The figure shows that when inflation is driven by the Fed unexpectedly cutting interest rates, young and middle-aged college-educated households lose the most, while older and less-educated households are largely unaffected or even benefit.
What industries are least affected by inflation? ›
Industries That Were Least Impacted or Benefitted by Inflation
- Real Estate. The impact of inflation on real estate has been beneficial for the overall development of the real estate business. ...
- Financial companies. ...
- Healthcare.
What to invest in during inflation? ›
6 Inflation Investments for the Future
- Equities. Equities generally offer a reliable haven during inflationary times. ...
- Real Estate. Real estate is another tried-and-true inflationary hedge. ...
- Commodities (Non-Gold) ...
- Treasury Inflation-Protected Securities (TIPS) ...
- Savings Bonds. ...
- Gold.
What stocks grow with inflation? ›
Companies in certain sectors (such as energy and materials) tend to own or control physical assets; they may also sell commodity-based products. Since the value of their assets and the prices of their products increase with inflation, their stock prices are positively correlated with inflation.